Risk Methodologies and Analysis

Risk Methodologies and Analysis

Risk management is an important aspect of any organization and can assist in promoting enterprise continuity as well as reducing costs. It is also a requirement in some countries for a particular set of organizations to conduct risk management. Risk management is justifiable when an organization can avoid common risks that might be more expensive to repair than to manage (Araz et al., 2020). It is also rational to conduct risk management as a way of increasing productivity. Risk management and analysis can be used to identify areas of wastage and redundancy; once identified, these areas can be improved upon and, as a result, increase productivity. Risk analysis can provide an organization with the platform to better understand its operations and how effective it is.

There are three main risk analysis and management methodologies: quantitative, qualitative, and hybrid. The quantitative risk analysis method assigns numeric values to risk factors to classify the severity of the risk to the organization. High-priority or severity risks are usually assigned a higher numeric value. Quantitative analysis allows its users the opportunity to identify and analyze multiple risks at once or even analyze the risks involved with an entire project. Quantitative analysis is most suitable for complex projects that require the setting aside of a budget reserve in case of emergency. The risk analysis method is also suitable for projects that require to be completed within a particular time frame with a limited number of resources. Qualitative risk analysis, on the other hand, is a technique used for the analysis of an individual risk. The method is used in situations where there is the probability of different occurrences which can lead to varying results. Values are assigned to determine the probability of different outcomes, and the most likely occurrence is given the highest priority. Some of the techniques used in qualitative analysis include SWOT analysis, historical data analysis and brainstorming.

Hybrid risk assessment and analysis is a method that combines some of the aspects of qualitative and quantitative risk assessment techniques. This method has become more popular because of the various advantages the method holds. The aim of the risk assessment methodology is to get a better understanding of the current system as well as the risks that might arise when the status quo is maintained. The method is most suitable when analyzing the current protocols and operation methods. It is also suitable for analyzing the current risks, their limitations and threat impact. The method can also be used in developing recommendations and a plan of action (Willumsen et al., 2019).

In order to conduct an effective risk assessment, the analyst must take into consideration four main pieces of information, threat, vulnerability, the likelihood of occurrence and impact. Likelihood refers to the probability of an event occurring. The higher the likelihood of happening, the more critical the risk (Samimi, 2020). Vulnerability refers to the weaknesses in a system or chink in the chain that a malicious user can take advantage of and cause damage to the system. Threat refers to an event that can cause harm to a system, such as a natural disaster or a hacker gaining access to company data. Finally, impact is the amount of damage that a particular threat can cause to the system and the amount of resources that will be required to repair the damages caused.

Some of the key components that go into conducting a risk assessment and analysis include identification and prioritization of threats. In this step of the process, the risk assessment officer should identify the threats the organization faces. Once these risks have been identified, the next stage is to arrange them in order of severity. The more severe a risk or more damage a threat can cause, the higher the priority of managing the risk and the more resources should be allocated to it. Another key element of conducting a risk analysis is the identification and prioritization of assets. Assets, in this case, are any resources a company can use in reducing and managing risks (Polinkevych et al., 2021). Assets include software, hardware, human resources and networks. If properly utilized, these resources can be leveraged to reduce risk while improving the operational performance of the company. The next step is to identify vulnerabilities.

Afterwards, the analysis can review their control measures and systems for reducing risk. Some control measures include encryption and alarm systems. Once this has been achieved, risk management can prioritize risks, analyze the impact of the risks, identify possible solutions and recommend control measures. Control measures can include the installation of antivirus software, training of staff, drafting policies, and finally, conducting a cost-benefit analysis. The final stage of any risk assessment and analysis is the documentation of the steps taken and the actions taken to manage risks. Documentation is important as it can be used for future reference and also for reviewing which control measure was more effective than others. Documentation can also be useful in conducting academic reviews and creating future policies. Effective risk management and analysis can be the difference between a successful company and a failing company.

References

Araz, O. M., Choi, T. M., Olson, D. L., & Salman, F. S. (2020). Data Analytics for Operational Risk Management. Decis. Sci., 51(6), 1316-1319.

Polinkevych, O., Khovrak, I., Trynchuk, V., Klapkiv, Y., & Volynets, I. (2021). Business risk management in times of crises and pandemics. Montenegrin Journal of Economics, 17(3), 99-110.

Samimi, A. (2020). Risk Management in Information Technology. Progress in Chemical and Biochemical Research, 3(2), 130-134.

Willumsen, P., Oehmen, J., Stingl, V., & Geraldi, J. (2019). Value creation through project risk management. International Journal of Project Management, 37(5), 731-749.

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In order to successfully manage risk, one must understand risk itself and the assets at risk. The way one goes about managing risk will depend on what needs to be protected and from what to protect it.

Instructions

Write a 3–4 page paper in which you:
Discuss at least three rationales for performing an information systems security risk assessment.
Explain the differences in quantitative, qualitative, and hybrid information systems risk assessment and illustrate the conditions under which each type is most applicable.
Describe the type of information that is collected to perform an effective information systems security risk assessment. Include at least three different types. Fully describe each and justify why you made your selections.
Describe at least five common tasks that should be performed in an information systems security risk assessment.
Use at least two quality resources in this assignment. Note: Wikipedia and similar websites do not qualify as quality resources. The Strayer University Library is a good source of resources.
Your assignment must follow these formatting requirements:
This course requires the use of Strayer Writing Standards. For assistance and information, please refer to the Strayer Writing Standards link in the left-hand menu of your course.
The specific course learning outcome associated with this assignment is:
Evaluate risk analysis methodologies to determine the optimal methodology based on needs, advantages, and disadvantages.